DuPont Decomposition
Why does GAIL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
14.6% = 8.8% × 1.06 × 1.56
Latest: FY2025
Profitability
Net Margin
8.8%
1.9% →8.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.06x
0.31x →1.06x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.56x
1.66x →1.56x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 13.6 pp over 3 years. Driven by net margin improving (1.9% → 8.8%), asset turnover improving (0.31x → 1.06x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 1.9% | 0.31 | 1.66 | 1.0% |
| FY2024 | ₹0Cr | ₹0Cr | 7.5% | 0.26 | 1.62 | 3.2% |
| FY2025 | ₹0Cr | ₹0Cr | 8.8% | 1.06 | 1.56 | 14.6% |
How to read DuPont
- • Rising ROE from margin = pricing power, operational improvement (good)
- • Rising ROE from turnover = better asset utilization (good)
- • Rising ROE from leverage = more debt, amplified risk (caution)
- • Falling ROE across all three = structural deterioration (red flag)
DuPont decomposition from audited annual financials. Factual analysis, not investment advice.